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GORENJE, d.o.o.

With reorganization, Gorenje is looking to ensure the conditions conducive to long-term growth and development

Pursuant to the provisions of the Rules and Regulations of the Ljubljana Stock Exchange (Ljubljanska borza, d. d.), and the relevant legislation, the company Gorenje, d. o. o., hereby makes the following announcement:

In early March, Gorenje was transformed from a joint stock company into a limited liability company, in order to simplify its corporate governance and pave the way for more efficient management and decision-making within the Group that will thus be better positioned to respond promptly to the challenges and changes in a demanding business environment, to reap the synergies with Hisense, and to cut its operating expenses. Hence, business transformation will be the priority task in all fields of our operations in the months ahead. Therefore, the company Gorenje d.o.o. started in early April, as a part of a batch of measures for improvement of business efficiency, the procedures for reorganizing the business processes at the level of the entire Group, which also includes new organization and job systematization at the parent company.

Reorganization and business optimization will not be restricted to the parent company; rather, they will also include all our subsidiaries and international business units. Some Gorenje sales companies abroad are already being integrated with Hisense sales companies. Thus, mergers have already been completed in Great Britain, France and Italy, while mergers in Russia and the Czech Republic are under way. Moreover, we will integrate into Gorenje the European part of Hisense International, including the TV set factory in the Czech Republic.

As a result of business transformation and restructuring, merging of functions, decreasing the number of management levels, and business optimization, the number of employees at support services in the Group will be decreased. The company shall seek to do this by so-called soft methods (retirement); for the jobs that the company finds are no longer required, however, labour contracts will also be terminated. Pursuant to the law, Gorenje is required to prepare a redundant worker lay-off program if more than 30 workers are laid off within 30 days; Gorenje will comply with this provision. In this process, we consistently comply with the notification procedures and consultations with the trade union and works council as provided in the relevant laws and both industry-wide and company collective labour agreement, and with the rules on participation and the role of the Employment Service of Slovenia, on the specification of criteria for determining the redundant workers, and on program composition.

The company has already sent its proposals for reorganization to the trade union and the works council. The trade union submitted in writing their opinion on the presented reorganization proposal, and the company formed in writing its position regarding the trade union's response. Pursuant to the law and the collective labour agreement, we held on April 17 joint consultation with the trade union and the works council, at which the employer presented the planned organizational and human resource changes, while the trade union and the works council presented their respective positions, notes, and expectations.

Unresolved issues from this consultation were addressed on April 23 by the Committee of Chief Managing Directors. The session was also attended by the chairmen of the trade union and works council, and the labour director. The trade union and the works council had received for their perusal the proposed agreement on the criteria for determining redundant workers. The company namely includes in all reorganization activities both the trade union and the works council. Consultation on the said criteria was scheduled for April 25, but the trade union and works council rejected the consultation on the worker redundancy criteria and announced that they would not take part in further consultations with the employer; as a result, an agreement on the worker redundancy criteria has not been reached.

Despite such decision, new organization, final wording of the rules and regulations on organization, management and job systematization, complete with job catalogue, will be adopted presumably in the first half of May. In the next step, the employer will, pursuant to the provisions of the Employment Relationships Act, adopt the criteria for specifying worker redundancy and the draft Program for laying off a large number of redundant workers. In our estimate, the program will include 270 redundant workers from Gorenje d.o.o., or good 6% of the current 4,212 employees. We shall seek to reduce this number with measures for prevention and restriction of lay-offs.

The company also informed the trade union and the works council in writing on April 24 about the intended regular termination of employment contracts for business reasons for a large number of workers. After the submission of the draft redundancy program, the company will invite both the trade union and the works council, regardless of today's negative response, to a consultation on the possible ways to prevent and restrict the number of lay-offs and on the possible measures to prevent and alleviate the harmful effects.

Disclaimer: The English text for all announcements is for information purposes only!

The information in this announcement will be available on the official web site of the company Gorenje, d. o. o., Velenje, Slovenia, www.gorenjegroup.com, for at least 5 years from the date of this announcement.

Management of Gorenje, d. o. o.
Date: 26.04.2019